Australia shares end 0.7 per cent lower

IAG,the country’s top car and home insurer,slumped 6.1 per cent to A$3.39 on volumes over four times its average.

“There have been a lot of profit warnings coming through and people are scared,worrying about what the next one will be,” said one trader,who asked not to be named as he was not authorised to speak to the media.

Among the stocks coming under targeted selling pressure on worries about earnings included underwear maker Pacific Brands,an importer that gets hit by weakness in the Aussie dollar,and media group Fairfax.

PacBrands fell 6 per cent to A$0.945 and Fairfax lost as much as 9 per cent before closing down 4.3 per cent at A$1.44.

Virgin Blue,which fell sharply last week after its warning,lost another 6.6 per cent on three times average daily volume.

June usually marks confession season,when companies make any changes to guidance ahead of the June 30 fiscal year end and the August reporting season.

The benchmark S&P/ASX 200 index fell 32.1 points to 4,381.0,after slipping 0.4 per cent on Monday and falling 7.9 per cent in May.

New Zealand’s benchmark NZX 50 index lost 1.2 per cent to 3,018.9 points.

Stocks managed to bounce into positive territory after the release of first-quarter gross domestic product data that showed slower but still respectable growth of 0.5 per cent,before falling back in the afternoon with investors unwilling to hold risky positions overnight.

Defensive stocks held onto gains,with Telstra Corp gaining 3.1 per cent and takeover target brewer Foster’s rising 0.4 per cent.

The top banks closed between 0.7 per cent and 1.5 per cent lower,with the biggest loss posted by Westpac down 1.5 per cent at A$22.41.

Energy firms dropped following their counterparts on Wall Street and weak oil prices,with Santos losing 3 per cent and Caltex off 3.7 per cent.